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SiO2-ZrO2:Er3+ planar waveguides are promising materials in integrated optics systems as active Er3+ ions have high photoluminescence at 1550 nm which is at the low-loss region of silica fibers. In scaling down the device dimensions from the long fiber length to small device dimensions of photonic integrated circuit, the Er3+ concentration has to be increased to achieve the same optical gain. However, excess doping of Er3+ ions would reduce the amplification efficiency due to pair-induced quenching (PIQ). In this paper, we report a study on 70SiO2-30ZrO2 doped with Er3+ and co-doped with Yb3+ as a sensitizing agent in reducing the effect of PIQ. The samples were prepared through sol gel process. Several layers were deposited on cleaned fused silica substrate via dip-coating and each layer was annealed at 900°C. Considerable increase in the emission peak intensities of photoluminescence spectra of the waveguides which were co-doped with Yb3+ demonstrates the sensitizing effect in reducing PIQ.